Moving Money From One Place To Another Is Not Economic Stimulus

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The Obama Administration seems to think that moving money from one place to another constitutes economic stimulus. A Washington Times editorial points this out. First, the administration is pushing food stamps, or SNAP (Supplemental Nutrition Assistance Program), as a way to get the economy moving.

“I should point out,” Agriculture Secretary Tom Vilsack said on MSNBC two years ago, “when you talk about the SNAP program or the food-stamp program, you have to recognize that it’s also an economic stimulus … . If people are able to buy a little more in the grocery store, someone has to stock it, package it, shelve it, process it, ship it. All of those are jobs. It’s the most direct stimulus you can get in the economy during these tough times.”

Jay Carney, the White House spokesperson, stated that unemployment checks were also part of the administration’s plan for economic stimulus. Senator Chuck Schumer chimed in: “unemployment benefits are the ‘best stimulus there is.'”

Huh? Moving money from one place to another is not economic stimulus. It’s simply moving money from one place to another. It’s not creating wealth. It’s not stimulating the economy.

This form of thinking is Marxism — not Karl, but Groucho. Food stamps and unemployment benefits are supposed to lend a temporary, helping hand to those in need. They’re not intended to be the primary vehicle for driving economic growth. The money that funds food stamps and welfare programs has to come from somewhere. Whatever isn’t borrowed from China must be extracted from hardworking Americans in the form of taxes before being redistributed to others. This process creates no growth. As Milton Friedman once wisely observed, “There’s no such thing as a free lunch.”

Taking money from Peter and handing it to Paul doesn’t create new wealth or opportunity, it just relocates existing wealth. With people who don’t understand this obvious principle running the country, it’s no wonder our economy isn’t going anywhere.